The digital revolution has had its benefits. Technology allows for many previously unthinkable efficiencies, and scalability is supercharged with a digital platform. No longer are financial institutions restricted to customers in their geographic location. Online, their reach can go miles further. But in some cases, integrating some “old school” tactics may be a distinct differentiator.
The B2C BNPL market has faced increased challenges. Buffeted by the winds of economic change and uncertainty, the model that relies on low-interest rates for margins has felt a squeeze.
In addition, heightened competition has led to difficulties in securing merchant partners. Despite the market being predicted to grow, it has become saturated, with a handful of large companies dominating the space. With fierce competition, merchants can be swayed, shifting providers according to the best conditions. Investors have also scaled back, choosing to invest more in B2B BNPL in light of B2C’s challenging environment.
“The barriers to entry online are low. You need to have good tech, and you need to get good integration,” said Arad Levertov, CEO and founder of Sunbit.
For Sunbit, the key lies in employing traditional tactics for the acquisition of merchant partners.
Send in the Salesman
“The B2C market is saturated, but not where we are because we are working mostly with physical locations,” he continued. “The main competition that we have is really the old-school credit card.”
Sunbit’s focus is servicing the mainly offline areas of mechanics, dentists, and veterinarians. The company deploys in-person salespeople to potential partners to sell the financing option in their checkout. While the product itself deploys machine learning and quick descisioning on BNPL loans, according to Levertov, this added approach has fed into their success.
“When you go to fix a car, the mechanic is never sitting in front of the computer taking Zoom calls from salespeople. Never. So, in order to sell to this mechanic, you need to get someone in front of this mechanic,” said Levertov. “There is really high turnover, and you need to make sure that you train everybody. Because of this, there is less competition.”
He explained that a lot of providers are dissuaded by the scalability of this approach. In-person sales visits can require a lot of time and personnel, which online approaches can streamline. However, Levertov explained that due to the offline focus of their target sector, in-person sales make more sense.
“What we do is bring technology to the world of papers and people interaction,” he said. “The salespeople started by showing their product to the local mechanic. And then, when we onboarded 100 Honda dealerships, we could go to the Honda headquarters and sell to them. Then Honda can endorse us to their dealerships, and we have a much further reach.” The company now has partnerships with a number of automobile brands and applies the same approach to dentist and veterinarian chains.
“We have people on the ground, we have technology, we have people with the relationship with the top providers. And we have people that sell from the office altogether,” said Levertov. “We built the company with a focus on technology and a great fintech product, but in addition to the fintech piece, we have this other angle.”
He explained that the approach also had created a stickiness to the product because of the personal relationship it had created. This relationship was particularly important within the current climate for B2C BNPL.
“The cost of customer acquisition is going up. So when the cost is going up, you need to make sure that the lifetime value from the merchant is also going up through stickiness,” said Levertov. “Right now, you go to merchants’ websites, and you see three or four BNPL providers at the checkout. This basically kills the entire purpose of buying and penetrating the channel.”
“With our approach, you sell to the merchant, but you train all the people below, too….it increases the stickiness and the brand awareness and the focus of Sunbit in the retailer”
Isabelle is a journalist for Fintech Nexus News and leads the Fintech Coffee Break podcast.
Isabelle's interest in fintech comes from a yearning to understand society's rapid digitalization and its potential, a topic she has often addressed during her academic pursuits and journalistic career.